The company’s shares are up more than 20% year to date … but will that last?
Comcast shares were upgraded by Guggenheim analyst Mike McCormack, who also raised his price target on the stock, largely crediting the company’s focus on growing its broadband business.
Comcast’s shares are up more 20% year to date, and the stock has risen more than 30% over the past year.
Things to Like About Comcast
The company’s focus on broadband couldn’t come soon enough — TV customers are rapidly jumping ship and switching to streaming services…
In April, Comcast delivered its first-quarter earnings report, revealing it lost 121,000 video subscribers. Meanwhile, Dish Network lost 259,000 and AT&T lost 627,000 customers. It’s estimated that 50 million customers will cancel TV subscriptions by 2021.
But Comcast is growing its broadband business — it actually gained 375,000 high-speed internet subscribers. The broadband market is far less competitive, giving Comcast an edge on future growth potential. And Comcast is showing strong customer retention rates with its broadband customers.
And the company plans to launch a streaming service solely for its internet customers in 2020. The service will cost $5 in addition to the customer’s internet service and will give customers access to Hulu, Amazon Prime, and Netflix. The company plans to support the service with advertising revenue.
Comcast also recently announced that it plans to sell its 33% Hulu stake to Disney in 2024. The company never had a large say in Hulu’s operations ever since it took over NBC Universal in 2011. Per the agreement, Disney will pay Comcast for its Hulu content for the next five years.
The Bottom Line
Investors seem fairly optimistic about Comcast’s growth prospects. The company’s revenue did fall short during the first quarter but customer growth exceeded investor expectations.
Given Comcast’s recent momentum, the stock may be underpriced. It currently trades at around $41 per share with a median price target of $48 per share. And considering the company’s strong earnings outlook, it may be worthy of your watchlist.
Which telecom and mass media stocks are on your watchlist? How do you plan to play the sector as the cord-cutting trend continues? Leave a comment and share your thoughts.
